1. 60th UIA Congress, Budapest Session of the International Estate Planning Group Sunday, October 30,2016 “Typical Client Situations”
Andreas Otto Kühne
Lawyer / specialised in inheritance law
BKL Fischer Kühne Lang Rechtsanwälte Steuerberater Partnerschaft mbB
Contact Bonn Contact Munich
Rheinwerkallee Pettenkoferstraße Bonn München
Tel.: Tel.: Fax: Fax:
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2. Last will of a divorced person having children with his ex-spouse
The testator is free to appoint any person as his heir
Interest of the testator: Joint children should inherit without the ex-spouse profiting from the inheritance
Divorced spouses do not have a succession claim nor a compulsory portion claim
Important: In case of a divorce, the former spouses should revoke their joint will

3. Last will of a divorced person having children with his ex-spouse
Option 1: The testator can impose restrictions on his children by appointing them as prior heirs (Vorerben) and someone other than the ex-spouse as subsequent heir (Nacherbe). In that case, the ex-spouse will not profit from the inheritance at all
In addition, the last will should stipulate that in case of the ex-spouse‘s death the appointment of the children as proir heirs will lapse; instead they have all rights of an unrestricted heir (Vollerbe)

4. Last will of a divorced person having children with his ex-spouse
Option 2: Testamentary contract with the children, in which they appoint their descendants/siblings as their heirs.
Downside: The contract remains binding on the children after the testator‘s death.
Note: If the children die childless, as a parent the divorced spouse still has the right to a compulsory portion, which cannot be excluded.

5. Last will of parents having one „problem child“
Interest of a testator being a parent of
a child that is expected to live of social security: To avoid recourse of the social welfare authorities against the child
a child having psychological / drug problems: To prevent the child from spending the inheritance e.g. on drugs

6. Last will of parents having one „problem child“
Solution: To appoint the child as prior heir (= not allowed to freely dispose of the inheritance) and the appointment of a permanent executor (Dauertestamentsvollstrecker)
instructed to only pay out those emoluments to the child that the social welfare authorities cannot access
instructed to only pay out a certain amount periodically

7. Last will and marital contract of an entrepreneur
Interests:
Long-term influence on the company
Wealth preservation
Company succession planning
Profit from inheritance tax benefits (if any)
Succession according to asset class (private assets to the family / business assets to the company)
Lifetime measures:
Build up private assets separate from business assets
Waivers of compulsory portions by non-successors
Adjust the Articles of Association
General power of attorney for the successor

8. Last will and marital contract of an entrepreneur
Option 1: Successor is appointed as sole heir; (other) family members are made beneficiaries of bequests regarding private assets.
Option 2: Successor receives the company / a certain percentage of stakes as a bequest.
Example: Spouse and descendants become joint heirs; they receive instructions for the apportioning of the estate, the successor being the beneficiary of the company.
Example: Establishment of a foundation mortis causa.

9. Last will and marital contract of an entrepreneur
Specific interests in a marital contract: Avoid splitting up the family business in case of a divorce
Solutions:
Exclude business assets from community of accrued gain in case of divorce
Matrimonial property scheme of separation of property (instead of community of accrued gain) and excluding pension adjustment
Waiver of compulsory portion

10. Last will of a patchwork family with children derived from different relationships
Interests:
Avoid claims of stepchildren against the spouse
Support the testator’s own children
Exclude “external” parent from succession

11. Last will of a patchwork family with children derived from different relationships
Option 1: Appoint biological children and stepchildren as heirs (with executor) and make the spouse beneficiary of a bequest
Option 2: Appoint spouse as exempt prior heir (befreiter Vorerbe) and appoint children as subsequent heirs as well as beneficiaries of additional bequests
Note: Stepchildren should be excluded as subsequent heirs if claiming a compulsory portion in case of decease of their biological parent

12. Typical lifetime and „mortis causa“ provisions for very wealthy individuals
incorporation of a company in the hands of the family to manage funds and real estate
Allows the UHNWI to give his successors progressive access to the family’s wealth; parents can keep strong influence by privileged voting rights
Guarantees proper wealth administration and cohesion
In some cases allows the heir to profit from inheritance tax benefits
The company as such can be appointed as heir

13. Typical lifetime and „mortis causa“ provisions for very wealthy individuals
Transfer assets to a family foundation: Family foundations are not privileged with regard to the inheritance / gift tax.
The revenues of the foundation being distributed to the beneficiaries are subject to a flat rate withholding tax instead of an income tax
Note: A family foundation is subject to a substitutional inheritance and gift tax every 30 years.

14. Typical provisions to avoid spoiling children
Appointment of an executor of the last will
Appointed by the testator or by a third person / a probate court
Strictly personal function
Transacting execution (aiming on the partition of the estate)/ permanent execution (Dauertestamentsvollstreckung))
Note: A permanent administrative execution is most likely to match the testator’s interests; the execution may end on a fixed date (e.g. until the age of 30 of the heir) or can last until the decease of the (spoiled) heir

15. Typical provisions to avoid spoiling children
Appointment of an executor of the last will
Obligation to provide optimal asset management
Wage is payed from the estate
Recommendation: Appoint a substitutional executor
Note: The child, underlying the execution, is entitled to waive the succession and to demand its compulsory portion

16. Last will of registered partnerships
Registered partnerships = same sex relationships
In the field of inheritance law, registered partnerships are treated in the same way as marriages
Therefore, the explanations concerning spouses are applicable to registered partnerships as well, e.g.
inheritance rights dependant on the matrimonial property scheme
right to a compulsory portion
same tax benefits as spouses

17. Thank you for your kind attention!